Life and general insurance companies may see a divergence in their fourth-quarter earnings as life insurers are expected to continue seeing robust demand for annuity schemes that will help offset declining revenue share from unit-linked plans (ULIPs). General insurers, by contrast, should report tepid growth as business activity is still weak.
“For life insurers, APE (annual premium equivalent) growth may be moderate with modest VNB (value of new business) margin unlike the third quarter, which witnessed stable margins for insurance companies. ULIP products are likely to be slower while annuity and credit life products are likely to have robust demand during the quarter.
“Further, the demand for protection is also expected to remain subdued,” said BNP Paribas-owned brokerage Sharekhan. It expects the VNB margin to remain at 3-8% in the quarter ended March 2022.
APE is calculated by taking into account both the single premium and regular premium to give a better picture of the growth in premiums. VNB is the profit margin of a life insurance company and is calculated by dividing the new business value by the annualised premium equivalent.